the following appeared on indiafacts.org on oct 13, 2014 at http://www.indiafacts.co.in/nobel-peace-prize-meets-eye-kailash-satyarthis-selection/#.VDtoUfmSySp

economist top 3 nations in GDP oct 2014isro women celebrate mangalyan sep 2014

The Nobel Peace Prize: was there more than meets the eye to Kailash Satyarthi’s selection?

Rajeev Srinivasan

Let me be quite up-front about a few things. One, I confess I had only vaguely heard about Kailash Satyarthi before the Nobel Peace Prize 2014 came looking for him. Two, I am as delighted as anyone else that global recognition has come to an Indian who’s involved in a good cause. Three, I do believe the issue of preventing child labor is as good a cause as it gets, especially as in dangerous occupations, and worse, in pedophilia.

Nevertheless, I have a few concerns about the award of the Nobel Prize to Kailash Satyarthi and Malala Yousufzai. First is the implied, and articulated, hyphenation between the two. Second is the overtly political nature of the prize. Third is the over-broad nature of assumptions made about what constitutes child labor. Fourth is the root cause of child labor and how to ameliorate it.

First, it has been a foregone conclusion that Malala Yousufzai would sooner or later get the Nobel Peace Prize, for her exceptional courage in the face of the oppression of women and girl-children in Pakistan. But how the prize committee suddenly chanced upon Kailash Satyarthi and decided to co-anoint him and to make a broad generalization about child labor and child protection is a bit mysterious.

It almost sounds as though the committee wanted to recognize Malala, and for good measure (two-for-one) decided to throw in a somewhat obscure Indian activist too. Not to diminish Satyarthi, but there is a decided feeling of “let’s now force-fit an Indian into this, so we can have some fearful symmetry”). For, there is a vast gulf between the concerns the two deal with. To say they both deal with children is banal; you might as well say they both deal with people: for gender is the big divide.

Perhaps the prize committee is ignorant of the fact that, despite the geographical proximity of India and Pakistan, the two countries are like chalk and cheese: we have almost nothing in common with each other. There is a western tendency to lump India with Pakistan (a hyphenation of India-Pakistan-equal-equal which annoys Indians because India is seven times larger, has ambitions to be one of the G3 of global powers, and is not a theocratic failing state and a military dictatorship as Pakistan is).

This hyphenation is about as absurd as hyphenating, say Cuba with the United States just because of geography.

Furthermore, the issues Kailash and Malala deal with are vastly different. Kailash Satyarthi has been working on the exploitation of children as domestic servants, in hazardous professions, in pedophilia, and in other ways robbing them of their childhood, their education, their health and their sense of self.

This, unfortunately, is a problem of poverty. Child labor happens everywhere where people have a hand-to-mouth existence, and in particular because an extra pair of hands in the field or the factory is economically rational because the marginal cost of feeding that extra mouth is minimal. It has nothing per se to do with India, or Hinduism for that matter.

On the other hand, what Malala was fighting against is a purely Islamic issue: the devaluation of women and girl-children. Her home area in Pakistan had come under the sway of fundamentalist and patriarchal Muslim clerics of the Taliban, who decreed that women, as per their interpretation of their religion, needed to be cloistered, and denied education.

In fact, this is a peculiarly Muslim problem, and there is no point in obfuscating it. Consider the women of Saudi Arabia who are not allowed to drive, or to work except in all-woman environments. Consider the endemic female genital mutilation in some Muslim cultures. Consider the Christian schoolgirls abducted as sex-slaves by Boko Haram in Nigeria. Consider the 4,000 Yazidi girls and women continually gang-raped by ISIS in Iraq.  Womens’ rights of various kinds are a problem in Muslim societies.

While it is true that there are many issues of exploitation of women in India, there is little justification for that based on religion, and Indian women are increasingly visible in all walks of life. One of the delightful photographs about Mangalyaan showed very traditional-looking, middle-aged, middle-class women aerospace engineers in mission control whooping it up! Now that is about as male a domain as it gets – rocket engineers; I don’t remember seeing photos of many women in NASA control rooms.

However, the Nobel committee’s citation explicitly hyphenated the two countries. This is a gross error of extrapolation, and is unfair to India. They said, and I quote, that the committee “regards it as an important point for a Hindu and a Muslim, an Indian and a Pakistani, to join in a common struggle for education and against extremism.”

Why are they bothered about the nationalities or religions of the two? So far as I know, when they offered the Peace Prize to Henry Kissinger and Le Duc Tho, they did not say how wonderful it was that “a Jew and a Buddhist”, formerly bitter adversaries as “an American and a Vietnamese” had worked together for a peace deal. When Yasser Arafat, Shimon Peres and Yitzhak Rabin were honored by another Peace Prize, they were never “a Muslim and two Jews” of warring “Palestine and Israel”.

Why, then, this special treatment for “Hindus and Muslims” and “Indians and Pakistanis”? This raises several questions – is the West attempting to interfere yet again in the Indian subcontinent? Especially as Malala called for both Nawaz Sharif and Narendra Modi to attend her prize ceremony? This could well be child-like and genuine on her part, but geopolitically, it is yet another, in the ad nauseam series of interventions that the West have made in the subcontinent, much to our detriment.

One clue is in the personalities in the Nobel Peace Prize committee. The chairman of the committee used to be the president, it turns out, of Socialist International, which is a worldwide grouping of far-left ideological groupings. No wonder it has made some baffling selections, such as Barack Obama (2009) and the European Union (2012), not to mention M Teresa (1979) and Henry Kissinger (1973). The Peace Prize has become overtly political, and it has deteriorated into geopolitical point-scoring rather than honoring a genuine achiever.

Furthermore, there are severe ethnocentric assumptions about exactly what constitutes ‘child labor’. Apparently, American children delivering newspapers or washing cars or mowing lawns or slinging burgers at McDonald’s doesn’t count as child labor. But an Indian child, son of a farmer, who helps his father while learning the craft of farming, is being forced into child labor? So there is ‘good’ child labor and ‘bad’ child labor? Is that like the ‘good Taliban’ and the ‘bad Taliban’?

It is not appropriate to use Western norms to judge what Indians might do. Western norms are not universal, as much as the West and their sepoys in the mainstream media (and other brown sahebs/sahebas) might claim they are. For instance, the transmission of a craft has traditionally been from parent to child. Traditionally, all craftsmen have passed on their craft using apprenticeships.

I accept that there are many egregious and illegal practices that go on in India regarding children. Some children are abducted, maimed and turned into beggars. Some are forced to be domestic servants or equivalent in restaurants, hotels and homes. Others work in dangerous jobs such as rag-pickers sifting through mounds of rubbish. Yet others have been forced into child prostitution. It is entirely laudable when Kailash Satyarthi and others focus on these terrible practices.

The problem is when blanket bans are imposed. For instance, on the face of it, the ‘Rugmark’ certification that no child labor went into carpets sounds like a good idea. But then what of weavers who are passing on their skills to their children? Are they violating some law? The issue of weavers is particularly galling based on historical wrongs, as we shall see in a minute.

It turns out that sometimes the imposition of a ban leads to even worse abuse. When children are forced out of work by ‘Rugmark’ and over-zealous inspectors, then the only avenue open to some of them becomes prostitution. Let us note in passing that the biggest customers for child prostitution and child pornography tend to be Westerners. Frying pan into the fire for the children?

There is a broad sociological question: given that Indians are among the most attentive and affectionate parents in the world, why on earth would they allow their children to be exploited? Survey after survey shows that Indian parents will sacrifice to great extents for their children. A recent example was Rural Postal Life Insurance. Even extremely poor people were willing to put aside their pitiful savings into life insurance if it helped ensure that their children would get an education even if they themselves died.

Why on earth would such parents – and perhaps this is an example of Indian exceptionalism in a world where increasingly the State is supposed to provide for children and later for elderly parents – condemn their children to a life of unfulfilled promise by forcing them into child labor? The only answer is poverty. As much as Kailash Satyarthi might disagree, poverty causes child labor (although I accept the reverse may also be true). I have plenty of anecdotal evidence to that effect, first hand observations in Kerala.

When I was a child and teenager, we used to have in our modest middle-class home an occasional live-in maid who herself was a teenager. Several of these girls were sent to live with us by their indigent parents, because they figured the girls would get to go to school, and get sufficient food. Interestingly some of them were from recently-converted SC families: they even retained their Hindu names, but went to church. And apparently the church lost interest in them as soon as they converted, so they were back in penury.

I am not sure if these girls considered themselves exploited. But the fact is that there are no such girls any more in Kerala. A perennial complaint housewives have is the lack of maids. The maids I see these days are all middle-aged, and no live-in service, thank you: they come for a couple of hours each day, and get paid fairly well on a per-hour basis. What has changed is that prosperity has come to Kerala, in the form of overseas remittances. As poverty disappeared, so did child labor.

Thus child labor is a symptom of an underlying disease: underdevelopment. Therefore the solution to it is development. To focus on child labor, a symptom, is to do premature optimization, which leads to unforeseen (and usually negative) consequences to the system. Granted, development doesn’t come overnight, but if you recognize poverty as the issue, it’s better to work on that.

And where did the poverty come from? Ironically, on the very same day as the Nobel was announced, The Economist magazine was kind enough to publish the following chart showing how the world’s top three economies fared in the past 2,000 years.

I have seen variants of this data from the economic historian Angus Maddison, and the sum and substance of it is that India was the world’s biggest economy throughout the history that Westerners recognize (not surprisingly, it is the Christian Era). Yes, the biggest, all the way from 1 CE  until 1700 CE except for a single blip when the Chinese overtook them in 1600 (possibly because the Muslim invasion had damaged India’s competence somewhat, especially because of lots of wars.)

In 1700, India was once again the biggest economy, but then look at what happened to it: the Battle of Plassey took place in 1757, and enabled Britain’s conquest of Bengal. India’s GDP plunged, and by 1900 it had disappeared altogether from the top 3, to be replaced by Britain! In fact, Britain, 2% of world GDP in 1700 and India, 27%, virtually swapped places. Thus, it was the Christian invasion that totally impoverished India, far more than the Muslims. Colonial looters destroyed India’s industrial capability and forced it to regress into a raw material supplier and a market into which they could dump goods. A simple reckoning suggests that they extracted $10 trillion from India, at current exchange rates.

In 1700, the world’s biggest centers of industry were four river deltas: the Brahmaputra and Kaveri in India, and the Pearl River and the Yangtze in China, which, together accounted for some 20% of global output in manufactured goods. In India, a large part of it was in high-quality textiles and other light manufacturing. The case of Dacca muslin is especially poignant.

The city of Dacca, the source of the finest fabric in the world, declined precipitously after the British systematically destroyed the weavers: legend has it that they cut off their thumbs. Perhaps more prosaically, the British forced Indians to buy Lancashire mill cloth made of Indian cotton, with a ruinous transfer price, extracting usurious profits and degrading the hitherto prosperous weavers from skilled artisans into unskilled labor, from which they have not recovered even now, three centuries later.

Thus, it is reasonable for Indians to feel a little queasy when that very same industry, weaving, is targeted by the very same imperial forces bent on maintaining their dominance. India lost its onetime stranglehold on fabric – just look at the plethora of Indian words (seersucker, paisley, chintz, calico, cashmere, madras) related to it – and has yet to recover.

Thus, while I am glad that Kailash Satyarthi has won an important prize, I cannot but feel that there is something slightly cynical and calculating about the way the prize was awarded and that it is not intended to help India at all.

2280 words, 12 Oct 2014

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A slightly edited version of the following was published on rediff.com on march 1st, 2012 at http://www.rediff.com/news/slide-show/slide-show-1-social-contract-why-modi-scares-the-usual-suspects/20120301.htm

Social Contract: Why Narendra Modi scares the bejeezus out of the usual suspects

Rajeev Srinivasan on why Narendra Modi is a threat to the establishment because he overturns many of the convenient myths they propagate

It is a predictable a winter ritual: around this time every year it gets into high gear. A bit like Super Bowl season or duck-hunting season: the season to invent, regurgitate and shed crocodile tears over stories about how wicked Narendra Modi is.

There are quite possibly three reasons why there is such widespread and venomous criticism of Modi, apart from the obvious political fact that he has become a viable candidate for national office. Any one of these is good enough reason for Modi-bashing; but given all of them simultaneously, no wonder his detractors are practically apoplectic.

The three reasons, in my opinion, are:

  • Modi has created a Social Contract with the people of Gujarat, which seems to work; it has broader national implications as well
  • Modi has tamed the corruption monster, by not taking bribes himself, but more importantly, preventing others from doing so
  • Modi has shown total contempt for political shysters and media hucksters: this hurts their amour-propre; not to mention their pocket-books

Modi’s greatest achievement has been the fact that he has created a clear social contract with the people of his state. (I am indebted to my friend B Rao of Los Angeles for this insight). Modi promised them development, and he delivered. In return, he asked for just one thing: discipline; and the people delivered. This has become a win-win situation for both parties, and for investors: there is a visible change in Gujarat’s fortunes, right on the ground.

The State GDP growth rate of Gujarat in the recent past has been at a scorching pace of 11.3% in 2005 (see http://www.rediff.com/business/slide-show/slide-show-1-glimpses-of-gujarats-high-growth-story/20120209.htm), considerably greater than that of India as a whole. This does not, alas, satisfy carping critics.

There was a long essay in Caravan magazine: I glanced through it, and one of the points made was that, even though $920 billion in investment had been promised for Gujarat during the last few ‘Vibrant Gujarat’ meets, only about 25% of these have materialized. That, however, is the norm in India: no more than about 25% of the promised investment actually materializes.

But look at the sheer numbers: almost a trillion dollars in investment proposals, and actual investment of, say, $230 billion! That is astonishing. This number can be directly contrasted with another large number: $462 billion. That is the amount estimated by Global Financial Integrity http://india.gfintegrity.org/ as the total amount siphoned out of India through illegal financial flows between 1948 and 2008.

In an intriguing irony, ‘Vibrant Gujarat 2011’ saw MoUs for $462 billion being signed – precisely the same as the amount estimated by Global Financial Integrity as having been spirited away in sixty years of allegedly socialist rule at the Center!

Modi has delivered on his implicit Social Contract: growth in return for order. When you think of social contracts, there are several models to consider, for instance those attributed to Europeans such as Locke, Rousseau and Hobbes, medieval imperialist models, Indian models, and the Confucian ‘Iron Rice Bowl’.

A common thread among all these models is that there is a tradeoff: there are rights, and there are responsibilities. It is necessary that you give away some of your rights in the interest of the greater good of society. The models differ in details, as well as in perspective – for instance is it teleological/utilitarian, preferring the greatest good for the greatest number, or is it deontological, preferring to protect the rights of the very weakest members? In some cases, it is neither, and is meant to be purely exploitative.

It could be argued that Modi has revived a traditional Hindu/Buddhist social contract, which, in return for discipline and hard work, provides the populace with security and righteous order. The population may pursue dharma, artha, kama, or moksha, without interference from the State; but they pay taxes and do their civic duty, and the State guarantees protection from predatory outsiders. This is roughly in line with the American idea of the rights to “life, liberty and the pursuit of happiness”.

This general Indian principle also evolved into the idea of gentlemanly warfare, wherein non-combatants were spared, with only the kshatriya class involved in bloodshed, battles ended at nightfall, and winners were chivalrous to fallen foes.

This sort of contract is explicit in Emperor Ashoka’s reign, and most vividly in Chanakya’s Arthashastra. Chanakya laid out in detail the kinds of information-gathering and management control that a sovereign needs to institutionalize, and contrary to popular mythology, Ashoka employed thousands of spies to ensure that any unrest was nipped in the bud and malcontents isolated.

This model was what turned India into the most prosperous nation in the world, as detailed in Angus Maddison’s magisterial economic history of the world. It was in fact the world’s leading economic power till roughly 1700 CE.

This model worked for several thousand years, from the earliest known stages of the Indus-Sarasvati civilization roughly five thousand years, up until the arrival of Arab and Turkish hordes in the 1100 CE timeframe, and later, the European hordes circa 1700 CE. This dharma or ‘natural order’ in Locke’s terms has been forgotten by modern Indians, brought up on a steady diet of misinformation.

The models that today’s Indians are more familiar with are Hobbesian, leading to “nasty, brutish and short” lives – those of empire. We have endured three forms of this imperial model: Muslim, Christian, and Communist. And we have barely survived.

The Arab/Turkish Muslim social contract of dhimmitude imposes order by explicitly reducing the rights of certain groups (non-Muslims) while allowing them the minimum possible subsistence to exploit them as productive members of society. However, in India, this was an unstable equilibrium because the Hindus resisted, and resisted continuously, unlike non-Muslims in, say, Iraq, Egypt or Persia.

The European Christian social contract of colonialism imposes order by explicitly pursuing a policy of overseas theft and loot, based on the superiority of “guns, germs and steel”. Interestingly, this social contract is now unraveling, as there are no more subject peoples to loot and steal from: Europe is collapsing into oblivion.

An excellent interview in the Wall Street Journal on February 26th with historian Norman Davies http://online.wsj.com/article/SB10001424052970203918304577240984211126416.html suggests that the end is nigh for Europe. Why? Its social contract with its citizens has been that they would get prosperity in return for providing the muscle for overseas expeditions. Bereft of empire and forced to fall back on their own (minimal) resources, countries like the UK are rapidly reverting to their natural, Hobbesian state: the riots in several cities last year are indicative of this.

The Communist social contract is a form of fascism and Stalinism.  It demands absolute loyalty from the public in return for… well, promises, but not often the reality, of prosperity. There is the stinging criticism that Communism offers you a version of democracy: “one man, one vote, one time”. That’s it. One time.

The incarnations of this contract range from the brutal gulags of the Soviet Union, China and Cambodia to the more mellow socialism in India. But that last, even though less violent in visible ways, has been an economic crime against humanity: it prevented 400 million Indians from climbing out of poverty. After sixty years of it, Manmohan Singh called hunger in India a ‘national shame’. It is indeed a shame, and it indicates the utter failure of the Communist/socialist social contract.

This is why the powers-that-be fear Modi’s obviously successful social contract: much as they try to paint Modi as hell-bent on victimizing Muslims, the latter have voted with their feet. They are willing to stay in Gujarat, eschew violence, and prosper. The Hindus are doing exactly the same thing: they have stayed, eschewed violence, and prospered. Precisely: a real secular state, where you succeed not based on your religion, but on how hard you work.

So clearly there is an alternative to the orthodox Stalinism of the powers-that-be, one that works. How terrible it will be if the rest of the country took notice! Whatever will the purveyors of failed social contracts do? That is reason number one Modi is bad.

Reason number two is related. Endemic corruption, and lack of leadership, are the biggest problems India faces. There are many leaders who are supposedly personally honest, but who allow those around them to indulge in the mass loot of the public treasury. Is that any better than if they were themselves indulging in theft? Probably not: it just adds hypocrisy to their other crimes.

Modi has been able to fix corruption with a singular mantra: not only is he personally not on the take but he doesn’t have offspring on the take either (Bhishma-like, eh?). But what’s more, he doesn’t allow anybody else to be corrupt either. This is most distressing for the neta-babu crowd. The fishes and loaves of office are turning into ashes in their salivating mouths: so what is the point in spending big bucks to get a rentier job or an MLA seat unless your rent-seeking self can recoup the investment in a matter of months? None whatsoever, and that is precisely the point!

It is amusing to note that Narendra Modi is immensely popular everywhere in Gujarat, except in the capital Gandhinagar – his party gets defeated here routinely, while it gets two-thirds majorities elsewhere! The neta-babu log are, understandably, unhappy with him. But I suspect the legendary mango man (aam aadmi) is quite happy.

The third reason is that, just as Modi has tamed the politician-bureaucrat nexus, he has also figured out the way to deal with the loud and self-important media, soi-disant “intelligentsia” and the NGO crowd. He doesn’t pay any attention to their foaming at the mouth; in fact, if I remember right, there was some incident where he simply got up and walked off a live TV interview when the rabid host kept hyperventilating.

India’s media and “intellectuals” have fattened themselves by attaching themselves to the mammaries of the welfare state, and following a simple mantra: “All the news that will get us crumbs from the government or junkets from foreign donors”. In fact, India has some of the most astonishingly biased people in positions of power.

There is, for instance, a statement by an activist immediately after the Sabarmati Express was set on fire, and 59 Hindus, mostly women and children, were burnt alive. This person said: “while I condemn today’s gruesome attack, you cannot pick up an incident in isolation. Let us not forget the provocation. These people were not going for a benign assembly. They were indulging in blatant and unlawful mobilization to build a temple and deliberately provoke the Muslims in India.” (‘Mob attacks Indian train’, Washington Post, Feb 28th, 2002 http://www.washingtonpost.com/ac2/wp-dyn/A13791-2002Feb27?language=printer).

Now imagine that this person sits on the all-powerful National Advisory Council! Let us now further imagine that this person has relentlessly filed petition after petition against Modi; has been accused of serial perjury and witness tampering; and is yet considered a credible spokesperson.

This is just an example of a media/NGO nexus that believes strongly in “truth by repeated assertion”, a successful tactic by the Communists too. That the Indian media is prostituting itself to the highest bidder (when they are not being bigots) is no surprise; no wonder Modi doesn’t care two hoots what they think. But this, of course, annoys the hell out of said media who fancy themselves as judge, jury and executioner put together.

There is a minor cottage industry that is centered on explaining how Hinduism is at the root of all evils in India. The latest is a bunch of misinformed kids at the Wharton School, University of Pennsylvania, who wrote an essay wherein they blamed everything that is wrong in India on the Mahabharata, Ramayana and Arthashastra. There is ample evidence that this sort of ritualized strawman-building-and-knocking-down is a successful imperial tactic.

For instance, the British claimed Ayurveda and kalari payat were evil, banned them, and burned the books. They claimed the ancient practice of smearing cowpox pus as a preventive against smallpox was ‘barbaric’, and banned it. They claimed devadasis were an abomination, but in fact they were, like geishas, cultured women of substance, who often endowed public works like dam-building. They claimed dowry and jati are evil; but dowry, according to Veena Talwar Oldenburg’s remarkable research, was the result of British practices. Jati is the very reason Indian civilization has survived, because its distributed nature makes it hard to eradicate.

Narendra Modi is one person who has figured out the antidote to the venom from the self-proclaimed “intellectuals” and their newspapers and TV. He goes over their heads to a higher-authority: the people. And the people respond, showing said “intellectuals” how superfluous they are. No wonder they are livid.

Thus, by re-creating a viable social contract, by being an ethical leader, and by ignoring the vicious, Modi has shown he has the one thing that India needs: leadership. Not at all good, if you are one of those currently pretending to be leaders.

2200 words, 26th Feb 2012

A version of the following appeared in DNA on June 1 at the following URL:

http://www.dnaindia.com/opinion/main-article_inclusion-of-the-rural-poor_1390325

Here is a PDF version of the same; DNA provided an absolutely fabulous photograph to go with it! inclusion of the rural poor jun 1

Financial inclusion for the rural poor: Rural Postal Life Insurance reaches out

Rajeev Srinivasan

Experts agree that bringing financial services to the rural masses is generally desirable. Significant value can be generated (both for individuals and for the nation) through providing services to the disadvantaged – for instance, the World Bank’s Christine Qiang estimates that national GDP grows by 0.8% for every 10 percentage-point increase in mobile telephony in emerging economies. Similarly financial services, such as micro-finance, can have a multiplicative effect on the unbanked.

The definition of ‘financial inclusion’ concerns the provision of financial services at an affordable cost. Both State-mandated interventions and market-driven efforts by the banks themselves have been tried. However, this has still left many strata of society under-served: a 2004 survey showed that there were only 59 deposit accounts for every 100 adults in the population. This also masks regional differences – from 17 in Manipur to 187 in Goa.

Most policymakers like some sort of dole – pensions, subsidies, etc., with the latest example being the NREGS scheme which guarantees 100 days-worth of wages to poor laborers. But these schemes are riddled with leakage. Subsidies are not sustainable in the long term, being most appropriate for short-term emergencies; they do not deal with underlying problems. Besides, the public sector has a reputation for callousness.

This is why it is all the more amazing that an innovative public sector initiative has had the effect of reaching many of the previously excluded in a short time. A conversation with the India Post Board member who dreamt up the program, Dr. Uday Balakrishnan, revealed two intriguing facts – one, the ability of the public sector to re-invent itself, and two, the willingness of poor cohorts to marshal their small savings and engage themselves in financial markets. It makes for a fine case study.

India Post is an underutilized player for financial inclusion, because it has reach and credibility. Given the 500,000 employees stationed in 155,000 outlets around the country, it is well placed as a distribution channel; it is the main payment conduit for 50 million NREGS participants. There is also trust in the institution, so that people are willing to incorporate it into their financial planning. As many as 200 million people hold Post Office Savings Bank (POSB) accounts.

It appears that India Post has been offering rural life insurance since 1995, but never emphasized it as a major line of business. When it began to focus on it recently, the results have been impressive: they empowered employees to think creatively and to innovate. A change management effort that also streamlined processes has enabled them to meet stiff targets. It is heartening that even staid government entities, with proper motivation, can be nimble.

Within a few months, some 12 million rural people have taken policies, with a majority of them opting for micro-insurance – for instance, life insurance policies that insure for up to Rs. 10,000, at a very affordable premium of one rupee a day. Larger policies are available for the price of a pack of beedis (Rs. 6) a day. The Post Office has become the largest player in this segment, covering more than twice as many people as all the other insurance companies put together, adding a million-plus new insurants a month.

Why have people opted to buy this level of insurance? Interviews suggest that the best reason is that the poor are aware of the opportunities that exist for their children, if only they could afford a decent education – in other words, there is an aspiration out there that the next generation must do better, and people are willing to sacrifice today’s consumption for children’s education tomorrow.

What is remarkable is that people are voluntarily spending their own tiny savings to buy this social security mechanism. Most of us think the great Indian public looks to the maa-baap government for everything, and that therefore doles, loan forgiveness, etc. are inevitable. It turns out the masses are willing to invest their small savings for the guarantee that a death in the family does not stunt their children’s future.

Once they hold this basic, fungible (if not liquid) financial asset (a life insurance policy), they use it as collateral to get loans from banks; that is, they are included in the system, and they become credit-worthy. In fact, the next thing they want is crop insurance, medical insurance, etc. – they are acting as rational economic players.

Furthermore, as a result of the law of unintended consequences, they are players in the broader financial market. Part of the premium (a prudent percentage, but still 1000s of crores)fs is invested in the market, and, over time, this should bring them better returns than those from the government-securities market.

The late C K Prahalad would be proud of them. The three billion at his ‘Bottom of the Pyramid’ are at last clawing their way out of poverty.

816 words, May 26, 2010

A version of this appeared on rediff.com at http://news.rediff.com/column/2010/may/12/rajeev-srinivasan-on-why-india-is-so-full-of-charlatans.htm

Accountability, a four-letter word in India: Why India has so many charlatans

Rajeev Srinivasan on why the State must ensure that people will pay for the consequences of their actions, a concept that is sadly unknown in India

“Clawback” – now that is a term in the American financial jargon that must be giving sleepless nights to some of the ex-Masters of the Universe from the fearsome investment banks that have fallen on hard times. This refers to the literal clawing back of benefits gained by those who, in hindsight, turn out not to have deserved them.

For instance, there is a move afoot to seize the multimillion-dollar bonuses awarded to investment bankers while their firms were creating the financial meltdown with their cavalier use of collateralized debt obligations and credit-default swaps. Those who caused billions of dollars-worth of damage couldn’t possibly deserve their fat bonuses.

It is not clear whether proposals to regulate Wall Street will succeed, and whether any ill-gotten gains will actually be clawed back by the taxpayer (who ended up, of course, bailing out said firms). But the very fact that this is being considered is a deterrent to future hanky-panky. That is, people would have to factor in the possibility that their malfeasance will have consequences.

India is refreshingly free of such old-fashioned niceties. In India, there are no consequences to the worst behavior, provided, of course, that you have the right credentials – that you belong to certain privileged categories of people, which include media mavens, film stars, politicians, cricket players, et al.

It goes beyond a lack of concern about delivering results – it has become routine to be cynical; promises are mere expectations. Many contracts are not worth the paper they are written. It has become a national pathology, or national pastime if you prefer, to lie about what one will deliver: you too must be guilty of saying “Consider it done!” when you knew there was no way you were going to do it.

Most Indians work this into their calculations, but it baffles foreigners, thereby adding to the impression that Indians, like Chinese, are inscrutable – a euphemism for “unreliable”. This makes it difficult to do business, because what appears to be an iron-clad guarantee to the outsider is often really only a ‘best-efforts, god-willing’ type of weasel-wording to the Indian. And Indians are accustomed to there being no penalty for lack of performance.

This is seen in every walk of life. On the one hand are the lionized cricket-players who make absolute billions. One would expect that the cricket-consuming (I am tempted to say something about Lotos-Eaters, but shall desist) classes would demand top-notch performances from their stars; but alas, they routinely put in pathetic performances because they know there are no consequences – they will get their millions, win or lose.

I have suggested in the past that there should be some deterrents to poor performance: I understand in soccer-crazy Latin America a player who caused the national team to be eliminated from the World Cup was shot dead on return. The threat of physical harm – say the loss of a finger or two if you screw up badly – would energize team-members wonderfully. Well, if you are squeamish about that, the least one can do is – there again, that wonderful concept – ‘claw back’ their ill-gotten earnings!

Similarly, much has been written about the lavish lifestyles of cricket executives – who, not surprisingly, include a number of politicians. Why not set Income Tax on these folks and claw back the BMWs and private jets and other bling they have accumulated?

Well, perhaps the cricketers are minor villains in comparison to politicians. The naturally cynical voter, accustomed to lavish promises at campaign time, expects nothing to materialize. Experience suggests that this is wise. The elaborate ruses intended to ease rent-seeking are truly creative, a wonder to behold.

A good example is the ongoing saga of the 2G mobile telephony licenses. The circumstantial evidence is damning – an ‘auction’ which was first-come, first served, and also wherein the last date for bidding is arbitrarily shortened by one week without notice. The final ‘winners’ included several players who were totally innocent of any telecom experience before and after. But they were quick to turn around and sell their licenses to telecom companies at 10x profit.

Interestingly, there has been no talk of clawing back these obscene and undeserved profits. The Prime Minister, who is said to be honest and decent and an economist, has maintained a Sphinx-like silence. The latest I heard about this is a detailed memo from the Department of Telecommunications exonerating themselves and their minister from all blame – a ‘clean chit’ in quaint officialese. No penalty for anybody.

Then there is the matter of the nuclear ‘deal’ that India has entered into, after many promises of a wonderful energy future. This was the justification for acceding to many conditions, which, in my opinion, eviscerated India’s nuclear deterrent capability and did nothing more for its energy security than create dependence on uranium-mining nations.

Interestingly enough, Pakistan and China, bellicose nuclear neighbors, have just entered into a deal for which Pakistan did not have to make any concessions whatsoever. China is giving Pakistan two nuclear plants as well as missiles: which, to put it bluntly, is pure proliferation. The United States, which screams “non-proliferation!” whenever India is involved, was strangely silent. In other words, yet another scam has been perpetrated.

Is anybody losing his job, or are they being prosecuted, for misleading the Indian public and walking the country down the garden path? Of course not. Similarly, the country is suffering the worst inflation in decades, and the price of food items in particular have shot through the roof. Has anybody been punished? Of course not.

By not putting in place mechanisms to ensure there is punishment for sinning, India is creating the right environment for ‘moral hazard’. People will take unnecessary risks, secure in the knowledge that if they win, they keep the loot; if they lose, the taxpayer pays. No wonder India is so full of charlatans.

Published on rediff at:

http://business.rediff.com/column/2009/mar/25/upa-will-cost-india-economic-superstardom.htm

The current global crisis is potentially an inflection point that marks the transition from an Anglo-American dominance to an Asian dominance in world economic affairs. Certainly, there is a startling turnaround in the fact that China holds $2 trillion in US Treasury securities and therefore lectures the Americans about running their economy – it feels like only yesterday when the shoe was on the other foot. Another indicator is China’s aggressive fire-sale purchases of commodities, including oil, copper, iron ore etc. from all over the world. “Have money, will buy” is their mantra.

But where is India in this “Asian century”? Alas, India has once again fumbled a golden opportunity to rise to economic superstardom. Given the profligate spending of the UPA and its self-proclaimed galaxy of economic geniuses, India now sports perhaps the highest deficit of any country: about 13%, a far cry from the 5% that the UPA has been promising us all along. Yet again, the Congress has successfully brought India back to the verge of the “Nehruvian Rate of Growth” of 2-3%, which is an economic crime against humanity, imposing abject poverty on 250 million people. After sixty years of Congress misrule, India has most of the world’s poor people, and some of the worst health and nutrition indicators, even worse than much poorer sub-Saharan Africa (see the NYTImes “As Growth Soars, Child Hunger Persists” http://www.nytimes.com/2009/03/13/world/asia/13malnutrition.html?_r=2&ref=world ). This is truly a crime and a national shame.

Read the rest of this entry »

This was published by the Pioneer, India Abroad and Rediff, and was picked up New American Media, from which a number of others also published it. Here are a few links:

Rediff

http://www.alternet.org/immigration/130818/econopocalypse_bringing_an_end_to_the_immigration_boom/

http://news.newamericamedia.org/news/view_article.html?article_id=15416e585b84cc13386b63fe900ca38c&from=rss

Pioneer

The end of the immigration boom

Rajeev Srinivasan considers the impact on India

The relatively free movement of labor across borders for the last few decades has generally had a positive impact on many countries because of the large remittances sent home by expatriates. In India, Kerala has been the biggest beneficiary, its relative prosperity sustained by its sons and daughters toiling away in West Asia or in hospitals around the world. But it looks like the global recession is beginning to seriously hurt international migration, and many migrants are forced to go home again.

… deleted

This was published in the New Indian Express on May 7th at

http://www.newindpress.com/NewsItems.asp?ID=IE720080506230543&Page=7&Title=TheOped&Topic=0

Here’s my original copy, as it was very slightly edited by them:

Air travel as metaphor

By Rajeev Srinivasan

Something odd is happening in the friendly skies these days: It may well be more pleasant now to take a flight in India than in the US! That would sound like sacrilege to those accustomed to the customer-friendliness, so to speak, of the erstwhile Indian Airlines, but a little de-regulation has gone a long way in India. Airlines are actually competing on the basis of providing value to passengers, not ‘rationing’ scarce seats.

On the other hand, high fuel costs, excessive competition, a lax regulatory environment, and the burden of aged equipment and high health-care and pension obligations are forcing American airlines to cut back on customer amenities. Not to mention on required aircraft maintenance. The result is delays, inconvenience, and general passenger frustration. The annual Airline Quality Survey this year gave a minus 2.16 score to the airlines, the worst in two decades.

This, in a way, is a repeat of what has happened in telecommunications. Arguably, cellular telephony is better, cheaper and more leading-edge than in America: Once again, in India, a little deregulation has removed the dead hand of socialist central planning, enabling entrepreneurs to provide a real service and make some money.

Airlines in the US have been cutting corners; this led to the cancellation of 3,000 American Airlines flights in April citing safety concerns. Several airlines have folded, including Aloha, Skybus and ATA, thus reducing flights to Hawaaii.

The actual experience of air travel in the US is made worse by the ordeals in the airports themselves. The security check is a nightmare, as you are forced to take off your shoes (even those worn by infants), your belt, every other item containing any metal, your jacket, your laptop from your carry-on bag, and put all these in plastic bins.

This would be half-tolerable if it weren’t for the thugs, also known as Transportation Safety Administration employees or contractors, who chivvy you along and bully you with barely-concealed disdain. In Newark airport, I was in line behind an old Indian woman and her daughter, who were shouted at and forced to take off every item of gold jewelry, including thin gold chains, bangles and rings, which obviously startled them.

Indian customs officials are infamous for being obnoxious, but these security people are a cut above. There was an infamous prison experiment at Stanford by Professor Zimbardo, wherein he randomly assigned a few students to be prison guards and others to be prisoners. Surprisingly soon, they took to their roles with gusto, and the guards became totalitarian bullies. This psychology may be in action here too.

Once you get on the plane, the torment does not end. I have sat on the tarmac in a tiny Embraer for two hours for a one-hour flight from Washington, DC to Newark. Congestion, the lack of well-trained air-traffic controllers, all this takes a toll. Fortunately for me, I wasn’t one of those who sat for ten hours on some tarmac last year on a Jetblue flight after a winter storm played havoc with their schedules.

The in-flight experience, too, is nothing to write home about. Leg-room is minimal; and if you are unfortunate enough to be wedged next to a large person, you (and they) can hardly breathe. I had a colleague who was forced by an airline to buy a second seat because he was grossly fat. He went to court, and the court agreed with the airline, no doubt pitying the passenger forced to sit next to him.

In-flight service on American airlines (United, Continental, American, Delta) has been pathetic for a long time. The food (including some kind of mystery meat not found anywhere else on earth) is deplorable; if you opt for vegetarian, you get singularly unappetizing boiled vegetables and quantities of cardboard-like lettuce. Fortunately, most airlines have now dispensed with food altogether. The only problem is that people bring on board large salads and sandwiches which they consume throughout the five-hour coast-to-coast flight.

The less said about the flight attendants the better. I once had a neighbor who was senior cabin crew on the San Francisco-Tokyo route for United. She was a battle-axe, and I dread to think of the poor passengers she was supposed to be helping. A lot of it has to do with age, and she was in her late forties. Without being age-ist, it is obvious that the body cannot take the wear-and-tear of being constantly on one’s feet, endemic jet-lag, and being professionally nice, unless one is about twenty-three.

Realizing this, Southeast Asian and East Asian airlines (Singapore, Thai, Korean, Japan) have long competed on in-flight service using young, attentive cabin crew. The Arabs are emulating this: Emirates, Qatar and Etihad hire Asian girls. And finally, India’s airlines have gotten the idea as well. Kingfisher and Jet seem to have found large numbers of attractive and smart young women as cabin crew. Jet has already created a reputation for good service on its international routes. I do hope they keep it up.

The decline in the standards of air travel in the US and the corresponding rise in India is a metaphor for the shifting fortunes of the two nations, and their trajectories. Civil engineering, once America’s pride and joy, is now under-funded. The great highways are neglected (a bridge in Minnesota collapsed recently), and the airports are tired and obsolete.

India’s advantage, once again in parallel with telecommunications, is that it is not saddled with old infrastructure. If India builds better airports (and, remembering Bangalore Airport, proper roads to reach them), the increasing numbers of air travelers will help the airlines grow. That story is true in many other fields: Banking and financial services, retail, real estate. India’s “demographic dividend” of an increasing number of young, working, upwardly-mobile people will drive internal demand for some years to come. The Asian Century is well on its way; and this is only as it should be, because up until 200 years ago, Asia dominated the world, as it will in future.